What F1 really sells isn't 22 race cars
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
F1 is back in Malaysia, and I'm a little excited.
Many people don't care about F1 at all. But back when I lived in a student hostel, there was no TV. When F1 was on at the weekend, I'd go to the food court, order a Coke and sit there watching the whole afternoon. At first I didn't really understand it. Over time I slowly learned about qualifying, pit stops and tyre strategy, and I've followed it ever since.
Then, just when I could finally afford to watch it live, Malaysia stopped hosting. It cost roughly RM300 million a year, and the return was getting harder to justify, so it ended after 2017. Not long ago I took my wife to watch Brad Pitt's F1, and loved it. Then this year I suddenly heard F1 was coming back to Sepang. Strictly speaking it's the Bahrain Grand Prix moved to Malaysia this time, but I was still very happy.
These past few days we finally sat down to watch together, and my wife started asking questions. It's like watching the World Cup with someone who doesn't follow football and keeps asking what offside means. What's qualifying? What's a formation lap? Why do the cars keep swerving left and right? Why are some on red tyres and some on yellow?
How much does it cost to run an F1 team?
As I explained, a question I had never seriously thought about popped into my head:
How much does it actually cost to run an F1 team?
When I looked it up, it turned out to be even more interesting than the racing.
Mercedes F1's 2025 accounts are public. Revenue was £633 million, roughly RM3.4 billion. Operating profit was about £167 million, roughly RM900 million.
In other words, an F1 team today isn't necessarily a toy that a carmaker pours a fortune into every year. It can be a very profitable business in its own right.
So where does the money come from?
First, the payout from F1 itself. In 2025, F1 paid out about US$1.4 billion to the 10 teams. Of course it isn't split equally; results, agreements and other factors all matter. But on a simple average, that's US$140 million per team, almost RM570 million.
Next comes sponsorship, which is even more striking. Industry estimates for 2026 put PETRONAS's title sponsorship of Mercedes at around US$80 million a year, Oracle's at Red Bull at about US$110 million, HP's at Ferrari at about US$100 million, and Mastercard's at McLaren at about US$90 million.
And those are only the biggest sponsors, not counting the dozen or even dozens of other partners on each car.
So look at an F1 car again and you'll see that every logo on it is actually inventory.
Mercedes' commercial revenue alone in 2025, including sponsorship and licensing, was about £415 million. Add merchandise, caps, clothing, model cars, game licensing, hospitality and Paddock experiences. All of it can be sold.
Then there's something harder to put straight into the P&L: marketing value.
Why does Mercedes do F1?
Because Mercedes = Formula 1 = Performance = Technology.
Every two weeks, people all over the world watch your car racing at the very top level. How much would that exposure cost if you had to buy it all through traditional advertising?
So even if the team only broke even, for a car brand like Mercedes it could still be very much worth it.
That's when I realised F1 teams today look more and more like sports franchises, a bit like an NBA team or a top Premier League club.
What you buy isn't just this year's profit. It's an extremely scarce position that others find very hard to copy.
There are only 11 F1 teams in the world, and only 22 race seats. Having money doesn't mean you can start a 12th team tomorrow.
The real winner is F1 itself
But looking further, I realised the truly impressive player isn't Mercedes, Ferrari or Red Bull.
It's F1 itself.
If F1 teams are franchises, F1 is the platform.
In 2025, F1's revenue was close to US$3.9 billion. Teams provide the competition, drivers create the stories, and races create the attention.
Cities pay to host races, broadcasters pay for TV rights, sponsors buy exposure, corporate customers buy hospitality, and fans buy tickets, subscriptions and merchandise.
The same attention is sold again and again.
So what F1 really sells has never been 22 race cars.
It sells an ecosystem that hundreds of millions of people around the world watch together, with extremely scarce positions inside it.
As a kid, I saw 22 cars racing round a track, and a Coke was enough to sit in a food court for a whole afternoon.
Looking again now, I see that what's truly valuable was never those 22 cars.
It's the position everyone wants to be close to, but only a very few can own.
Many businesses are the same.
What's truly valuable may not be the product you sell.
It's whether you can own a position that others are willing to keep paying to be part of.